Billboards have been around for a long time and they are everywhere.
Companies pay big bucks to get their advertisements on billboards because they know that they work.
Why does this matter? Because if you own a billboard, you too can profit from this $6.5 billion industry. Source: IBIS World
So you know there is money to be made here, but the real draw of owning a billboard business is the passive income it can generate.
A billboard will keep generating advertising revenue for you whether you are eating, sleeping, or walking the dog.
Now I don’t want to overstate the case: No profitable business is going to be completely passive, but there are some great features of the billboard business that allow it to be more passive than many other businesses that earn comparable revenue.
We’ll get into how passive a billboard business can be, how to start a billboard business from the ground up, and how to find good locations for your billboards.
We will also cover the pros and cons of owning a billboard business so you can get a more complete picture of what is involved in this business.
But before you we dive into all that, let’s cover some introductory questions that you might have as a beginner in this space. If you want to skip the introductory stuff, you can jump ahead to the section on how to start a billboard business by clicking this link.
This post may contain affiliate links. If you click on a link and complete a transaction, I may make a small commission at no extra cost to you.
The information contained in this post is for informational purposes only. It is not a recommendation to buy or invest, and it is not financial, investment, legal, or tax advice. You should seek the advice of a qualified professional before making any investment or other decisions relating to the topics covered by this article.
What Is a Billboard Business?
A billboard business is an outdoor advertising business that owns one or more billboards and makes money by selling advertising space on those billboards. Advertising revenue is the primary way to make money in the billboard business, but you can also profit in this industry by obtaining leases and permits necessary to erect billboards and sell those rights to large billboard companies.
How Much Money Does a Billboard Make?
According to AZ Central, even in remote locations, billboards can earn you a profit of about $5,000 per location. In busier areas, that can increase to about an average of $20,000. In the most heavily-trafficked and desired areas, billboards can generate more than $100,000.
Can Billboards Provide Passive Income?
Billboards can provide semi-passive income once you have acquired a billboard and rented it out to an advertiser. But a billboard business will not be completely passive. You will need to find new companies that want to rent your billboard space as existing leases expires.
In addition, your billboard displays will need to be changed as new companies advertise on them and you may need to perform maintenance on your billboards from time to time.
Of course, you can hire someone to take of maintenance and repairs to keep the business as passive as possible.
If you want to expand your billboard operations, you will need to find new locations that work or you will need to buy existing locations. All of these functions will require some work and attention on your part.
But owning a billboard business does not require regular interaction with retail customers or employees, and your billboards not going to be under constant repair – most of the time, they will be just fine. These features of a billboard business allow it to be much more passive than your standard actively managed business.
How Do I Start a Billboard Business?
Finding a Suitable Billboard Site
The first thing you will need to do is find a location for your billboard. That is easier said than done.
Finding a location that works is perhaps the toughest part of starting a billboard business.
You may imagine that if you own land that has great visibility to major roads, you can just build a bunch of billboards on it and start your business. Or maybe you are thinking you can buy land that is next to a highway and load it up with billboards.
But due to the Highway Beautification Act of 1965, there are strict federal rules around the placement of billboards near highways. You also have state and local rules that often further restrict the placement of billboards on land.
To make matters worse, there are mega-corporations like Lamar, Outfront, and Clear Channel that are constantly on the hunt for good locations. All of this means that finding a suitable location may be extremely difficult.
So what should you do?
One option is to look at more remote outdoor locations. There will be less competition from the big players in the industry and you may find undiscovered sites that could be suitable for your new billboard. This may take a lot of work and research, but the rewards could be there.
Buying a Billboard
Another option is to buy an existing billboard. This is the far simpler option, but the drawback is that you will probably wind up paying a premium for the convenience of having a ready-made business delivered to you. And finding a billboard for sale near you may be just as difficult as finding a workable site in your area.
Nevertheless, it may be an option worth exploring.
You can call a business broker to inquire if there are any billboard businesses for sale. According to Billboard Insider, Kalil and Co and Johnsen Fretty may be good places to start.
You can also go online to look for billboards.
Here are sites offering billboards for sale:
If you need financing to buy your billboard and prefer to operate online, you may want to check out Fundera. They are affiliated with Nerdwallet and offer small business financing options from a variety of potential lenders. You fill out one application and they provide you with a list of lenders suited for your situation.
Will My Billboard Make Money At the Location?
Part of finding a suitable location is making sure your billboard will make money at that location. If you buy an existing billboard, that should be fairly easy to determine because you will know what leases are in place and the historical performance for that billboard.
But erecting a new billboard will carry some risk because you won’t know for certain what type of demand there will be and how much you can charge for the billboard space.
How much you can charge will depend in large part on how much traffic is on the road next to your billboard. You need to figure that out before you settle on a billboard site.
Many times, the city will be able to provide this data to you. Obviously, the more traffic the better.
You may be able to get a sense of the demand for billboard advertising space by reaching out to local businesses in the area to see if they would be interested in billboard advertising and how much they would pay.
You can also call the owners of billboards in the area (if there are any) and ask how much it would cost to advertise on their billboards. By doing this, you should be able to get a pretty clear sense of what the market rent is for that area.
Of course, once you have a billboard up and running, your work is not done.
You will need to make sure the billboard space stays leased up. You also need to ensure that your permits don’t lapse and your ground leases are renewed (if you are renting space from the land owner). And as I mentioned before, you will need to maintain the billboards if they ever malfunction or otherwise need attention.
If you want to learn more about investing in billboards, Frank Rolfe has written the leading book on the topic.
What Are the Pros and Cons of Owning a Billboard Business?
Here are the Pros and Cons of Owning a Billboard Business:
|
Pros of Owning a Billboard Business |
Cons of Owning a Billboard Business |
|
A billboard business can be profitable |
Good billboard locations are difficult to find |
|
A billboard business can be semi-passive |
A billboard business can be expensive |
|
Billboards are valuable assets |
Strong competition |
|
Independence |
Billboards need to be replaced over time |
|
Growth potential |
|
Pros of Owning a BillBoard Business
A Billboard Businesses Can Be Profitable
We already covered the profit potential for a billboard business, so I won’t cover that again, but it’s clear that if done correctly, you can make a tidy profit from owning billboards.
A few well-located and well-maintained billboards can provide terrific income to you for many years.
A Billboard Business Can Be Semi-Passive
This is another area that we covered before, so I won’t go into a lot more detail here.
Although billboards are not completely passive (in fact any real and profitable business is going to require some work and oversight), they can offer a pretty good income without all of the hassle associated with running other types of businesses because you do not have employees or retail customers.
You will need to interact with people who want to advertise on your billboard from time to time, but that is a far cry from dealing with high-volume walk-in traffic and all of the complications that can arise from that.
Billboards Are Valuable Assets
Each billboard in your business is a valuable asset that can be sold. More important than the billboard itself are the permits and land leases that you possess that allow you to erect and keep your billboard in its location. These are hard to get and can command a strong price in the marketplace.
Independence
If you are the owner of your own business, you do not answer to anyone. Hard to put a price on that.
Growth Potential
You can grow your billboard business by setting up or buying additional billboards. While it may be challenging to find new suitable locations, it is far from impossible. You can also choose to grow your business by upgrading existing billboards.
For example, if you have a billboard in a terrific location that gets tons of traffic, you may want to upgrade to a digital billboard that can generate much more revenue for you.
According to AZ Central, the potential rental income for a digital or LED display billboard could be anywhere from $3,500 to $25,000 a month, based on a digital billboard advertising cost for an 8-second spot in a loop of 64 seconds with other advertisers.
Might be worth the upgrade if you have a prime location.
Cons of Owning a Billboard Business
Good Billboard Locations Are Hard to Find
We already covered the difficulty of finding good billboard locations, so I won’t belabor the point.
Legal locations that aren’t already taken are scarce and everyone knows it, which makes it hard to set up new locations and makes it difficult to buy existing ones.
A Billboard Business Can Be Expensive
Getting into the billboard business can be expensive.
The cheapest type of billboard is a one-sided wooden one. That will still cost you thousands of dollars. If you want to go a step up, a steel billboard with two sides costs between $35,000 and $90,000. If you want to go high tech and high end, you could purchase a state-of-the-art digital billboard for more than $1 million.
Source: AZ Central
Related reading: Interested in a passive income business that is more affordable to start? You may want to check out my articles on these other passive income businesses that have a much lower cost of entry:
Or if you don’t want to spend any money to start earning passive income, here are 15 truly passive income ideas that require no money to start.
Strong Competition
As I mentioned before, the billboard industry is dominated by a few very large players. That means that you will be a small fish in a big pond. That does not mean you cannot succeed, but you should understand the challenges facing you when you want to expand.
Billboards Need to Be Replaced Over Time
We already talked about how billboards will need maintenance. But they also will need to be replaced over time.
How Long Do Billboard Structures Last?
|
Type of Billboard |
Useful Life of Billboard |
|
Wooden Billboards |
30-40 years |
|
Steel Billboards |
70-80 years |
|
Digital Billboards |
10 years |
Sources: Billboardinsider and Oohtoday
So if you are setting up a new wooden or steel billboard, you won’t need to worry about replacing it anytime soon. But if you are buying a digital billboard, you will need to replace it in about 10 years. And, as we discussed earlier, digital billboards can be very expensive.
In a similar vein, if you are buying an existing billboard, you will want to know how much useful life is left on that billboard. If there is not much time left before you need to replace it, you should discount the price accordingly (if it already hasn’t been discounted) and set aside some cash reserves to replace it when the time comes.
Conclusion
Owning billboards can be a terrific way to earn passive income and get out of the rat race.
But as you can see by now, it’s not as simple as putting up a billboard in your backyard and waiting for the money to roll in.
If you want to succeed in the billboard business, you need find great locations, be mindful of the competition, and thoroughly address the risks involved in operating this business.
If you want more great passive income ideas, check out my ultimate beginner’s guide to passive income [25+ strategies that work], where I cover tons of effective strategies that generate passive income.
One of my favorite articles on passive income is my piece on businesses that run themselves. In that article, I cover some great businesses that can generate attractive levels of return without a lot of day to day involvement by the owner (obviously, billboards are included in the list, but there are many more). Check it out here.
